John Armstrong: High-roller Goff puts it all on one big punt

Phil Goff. Photo / Dean Purcell

Phil Goff is not just risk-averse. He is risk-phobic.

So it speaks volumes for the Labour leader's predicament five months before a general election that he has been persuaded to take a huge political punt which might just get him and Labour back into contention in November.

Equally, this audacious gamble could fail, stripping Goff of what is left of his political capital.

His decision to campaign on a capital gains tax is probably the biggest "ask" in New Zealand politics since Ruth Richardson and Jim Bolger mistakenly thought middle New Zealand would tolerate such things as means testing state-funded superannuation and user-pays for overnight stays in public hospitals.

It is too soon to gauge whether middle New Zealand will be equally intolerant of a tax on its hard-earned assets.

That will have to wait until people become familiar with the fine print of Labour's economic policy, which will be revealed at Wellington's Westpac Trust stadium on Thursday.

While keeping his fingers firmly crossed, Goff can have some confidence that this might not be the disaster some have been predicting.

The news that Labour would be pushing such a tax might not alone have been enough to incur the wrath of the electoral gods. The sky has not fallen in.

Information on the likely exemptions was leaked to calm agitated voters who might have got the wrong end of a very large stick.

Sure, there were predictable squeals from the rental sector. And Goff is going to have his work cut out explaining why he is backing a tax which, tax experts predict, will mean rent rises for Labour voters.

It helps Goff that a capital gains tax looks like an idea whose time is coming - albeit slowly after having suffered a major setback in being rejected by the Tax Working Group, the panel of experts whose report underpinned National's "tax switch" last year.

That it is an idea whose time is coming can be inferred by the tax no longer being a taboo topic.

There is now increasing debate on its merits - the chief one being that its absence distorts investment decisions.

It also disproportionately hits those on higher incomes, one of its other attractions for Labour.

But arguments about technical matters don't win voters' hearts and minds.

Here, Goff and Labour are starting from scratch.

Rather than being the "game-changer" Labour so desperately needs, a promise to introduce a capital gains tax may only polarise voters. It will reinforce Labour's core support, but could tilt floating voters even further in John Key's direction.

Labour has to be clear as to why it is promoting such a tax. Is it because of its merits? Or is Goff doing it only because he had to do so? Labour has to be able to point to a fresh source of tax revenue to make its fiscal costings and debt repayment plan robust enough to withstand intense scrutiny from National.

National is already portraying the policy package as Labour reverting to its old habit of "tax and spend".

Labour will seek to rebut that charge on Thursday with what is described as a "flinty" policy which will be largely bereft of spending promises, the emphasis instead being on cutting public debt at the same speed as National over the medium term.

The policy will be pitched in terms of offering voters a clear-cut choice. Goff will hammer the line that a vote for Labour will be a vote to retain full public ownership of the state-owned enterprises that National has singled out for partial privatisation - the price being a capital gains tax that most people will never pay.

National could not believe its luck on Tuesday as it became apparent that a capital gains tax would be part of Labour's economic policy package.

It thought it had got even luckier when Labour refused to confirm this was the case or bring forward Thursday's release of the policy.

That seemingly left the tax undefended and at National's mercy for more than a week.

But National lacked the vital detail of exactly how Labour's version of a capital gains tax would work. The governing party could mount only a general attack on the proposal rather than being able to target specific provisions and really put the wind up people.

National struck a similar problem in arguing that Labour's numbers did not stack up and that the tax would contribute little to filling what John Key calls the $12 billion hole in Labour's fiscal calculations.

The Beehive spin machine cranked itself up for another onslaught on Labour's fiscal credibility in what was supposed to be a rerun of the mauling Key inflicted on Labour's policies on research and development and raising the minimum wage when they were released a couple of months ago.

This time, however, the spin machine did not have Labour's policy or costings.

Until Labour presents its timetable for the implementation of its various policies, the argument over numbers is academic.

With Labour refusing to say anything about its package, National was left shadow-boxing.

It was also in danger of making the tax sound more onerous than might be the case. As it is, National has stressed the tax will not raise much money in the short-term, thus undercutting any argument it might mount in terms of the reach of the tax extending beyond the very wealthy.

National's offensive fizzled out before it had barely begun. The big guns are now trained on Thursday.

In refusing to flinch in the face of National's pressure to get the package brought forward, Goff scored a minor tactical victory over the old enemy.

But that counts for nothing. What matters for Labour is that its message on Thursday is one of solid reassurance that a capital gains tax will be paid by around 200,000 people each year - about 6 per cent of taxpayers.

Labour has to hammer that message home. It has to stick. Otherwise it will not be "game on". It will be "game over".